1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995,
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NO. 0-10235
GENTEX CORPORATION
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2030505
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
600 N. CENTENNIAL, ZEELAND, MICHIGAN 49464
(Address of principal executive offices) (Zip Code)
(616) 772-1800
(Registrant's telephone number, including area code)
___________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
--------- ----------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--------- ----------
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Class at July 13, 1995
----- ----------------
Common Stock, $0.06 Par Value 16,733,173
Exhibit Index located at page 11
Page 1 of 15
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PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
At June 30, 1995 and December 31, 1994
ASSETS
June 30, 1995 December 31, 1994
------------- -----------------
CURRENT ASSETS
Cash and cash equivalents $16,298,689 $11,183,991
Short term investments 15,683,471 8,146,964
Accounts receivable, net 12,183,338 11,086,980
Inventories 5,325,198 5,303,552
Prepaid expenses and other 735,125 715,466
----------- -----------
Total current assets 50,225,821 36,436,953
PLANT AND EQUIPMENT - NET 17,903,791 17,172,523
OTHER ASSETS
Long-term investments 24,044,983 26,282,085
Patents and other assets, net 2,123,961 598,918
----------- -----------
Total other assets 26,168,944 26,881,003
----------- -----------
Total assets $94,298,556 $80,490,479
=========== ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 5,919,811 $ 4,115,391
Accrued liabilities 4,833,324 4,621,936
----------- -----------
Total current liabilities 10,753,135 8,737,327
DEFERRED INCOME TAXES 928,561 377,691
SHAREHOLDERS' INVESTMENT
Common stock, par value $.06 per share 1,003,990 990,569
Additional paid-in capital 34,603,295 31,875,455
Retained earnings 47,993,556 39,409,938
Deferred compensation (971,588) (899,136)
Unrealized loss on securities available for sale (24,687) 0
Cumulative translation adjustment 12,294 (1,365)
----------- -----------
Total shareholders' investment 82,616,860 71,375,461
----------- -----------
Total liabilities and
shareholders' investment $94,298,556 $80,490,479
=========== ===========
See accompanying notes to condensed consolidated financial statements.
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GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30 June 30
------------------------- --------------------------
1995 1994 1995 1994
----------- ------------ ------------ ------------
NET SALES $26,020,719 $20,708,682 $52,063,687 $41,867,472
COST OF GOODS SOLD 15,947,030 11,652,930 31,373,435 23,576,765
----------- ----------- ----------- -----------
Gross profit 10,073,689 9,055,752 20,690,252 18,290,707
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Research and development 1,530,822 1,201,679 2,919,372 2,419,245
Selling, general
& administrative 3,344,416 2,275,040 6,413,300 4,461,062
----------- ----------- ----------- -----------
Total operating expenses 4,875,238 3,476,719 9,332,672 6,880,307
----------- ----------- ----------- -----------
Income from operations 5,198,451 5,579,033 11,357,580 11,410,400
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest, net 686,720 368,204 1,313,937 658,692
Other (9,735) 53,557 52,101 57,495
----------- ----------- ----------- -----------
Total other income 676,985 421,761 1,366,038 716,187
----------- ----------- ----------- -----------
Income before provision
for federal income taxes 5,875,436 6,000,794 12,723,618 12,126,587
PROVISION FOR FEDERAL INCOME TAXES 1,879,000 2,011,000 4,140,000 4,035,000
----------- ----------- ----------- -----------
NET INCOME $3,996,436 $3,989,794 $8,583,618 $8,091,587
=========== =========== =========== ===========
EARNINGS PER SHARE $0.23 $0.23 $0.50 $0.48
WEIGHTED DAILY AVERAGE OF
COMMON STOCK OUTSTANDING 17,082,452 17,072,308 17,074,695 16,979,390
See accompanying notes to condensed consolidated financial statements.
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GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1995 and 1994
1995 1994
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $8,583,618 $8,091,587
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 1,588,834 1,390,989
Gain on disposal of equipment (9,040) 0
Deferred income taxes 655,379 382,266
Amortization of deferred compensation 147,299 188,569
Change in assets and liabilities:
Accounts receivable, net (1,096,358) (1,100,885)
Inventories (21,646) 123,794
Prepaid expenses and other (124,168) (10,600)
Accounts payable 1,804,420 1,258,292
Accrued liabilities 211,388 (326,777)
----------- ----------
Net cash provided by
operating activities 11,739,726 9,997,235
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (Increase) in short-term investments (7,536,507) 937,616
Plant and equipment additions (2,279,044) (1,940,110)
Proceeds from sale of plant and equipment 5,000 0
Decrease (Increase) in long-term investments 2,212,415 (10,982,386)
Increase in other assets (1,548,403) (72,282)
----------- ----------
Net cash used for
investing activities (9,146,539) (12,057,162)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock and tax benefit of
stock plan transactions 2,521,511 3,364,396
----------- ----------
Net cash provided by
financing activities 2,521,511 3,364,396
----------- ----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 5,114,698 1,304,469
CASH AND CASH EQUIVALENTS,
beginning of period 11,183,991 5,979,530
----------- ----------
CASH AND CASH EQUIVALENTS,
end of period $16,298,689 $7,283,999
=========== ==========
See accompanying notes to condensed consolidated financial statements
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GENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) The condensed consolidated financial statements included herein have
been prepared by the Registrant, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Registrant believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these condensed consolidated financial statements be
read in conjunction with the financial statements and notes thereto
included in the Registrant's 1994 annual report on Form 10-K.
(2) In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting
of only a normal and recurring nature, necessary to present fairly the
financial position of the Registrant as of June 30, 1995, and
December 31, 1994, and the results of operations and cash flows for
the interim periods presented.
(3) Inventories consisted of the following at the respective quarter end:
June 30, 1995 December 31, 1994
------------- -----------------
Raw materials $3,327,930 $3,568,074
Work-in-process 275,183 275,183
Finished goods 1,722,085 1,460,295
----------- -----------
$5,325,198 $5,303,552
=========== ===========
(4) The Company owns four U.S. Patents for automatic mirrors and
electrochromic devices that were the subject of patent infringement
claims asserted against Donnelly Corporation ("Donnelly") during 1990
to 1993. All of those claims, except for the patent infringement
claim against the Donnelly "Polychromic" rearview mirror, have either
been adjudicated or were resolved in a settlement in May 1993. Gentex
received $3.6 million in damages and settlement fees.
Despite the May 1993 settlement agreement, in November 1993, Donnelly
requested that the U.S. Patent and Trademark office (USPTO) re-
examine certain claims it had granted to Gentex in the Company's U.S.
Patent No. 5,128,799. The USPTO agreed to do so, which is not
unusual, and that re-examination is proceeding.
In the case of Gentex Corporation vs. Donnelly Corporation (No. 1:93
CV 430), filed in U.S. District Court for the Western District of
Michigan, Southern Division, the patent infringement claim against
Donnelly's "Polychromic" rearview mirror was adjudicated by the
Federal District Court in March 1994, when it granted Donnelly's
motion for summary judgment of non-infringement of Gentex U.S. Patent
No. 5,128,799 by the Donnelly "Polychromic" rearview mirror. However,
Gentex appealed that March 1994 judgment to the Court of Appeals for
the Federal Circuit. Oral arguments were heard on that appeal in
November 1994, and a decision is pending.
The Company also is in litigation with Donnelly on the July 1993 and
October 1994 suits Donnelly filed for alleged patent infringement by
the Company's products. The July 1993 case of Donnelly Corporation
vs. Gentex Corporation (No. 1:93 CV 530), filed in U.S. District Court
for the Western District of Michigan, Southern Division, is related to
alleged infringement of three Donnelly patents directed to the use of
lights in mirrors ("light and rearview mirror assembly patents") and
of one Donnelly patent directed to the use of a rearview mirror with a
dark or color-matched seal ("dark or color-matched seal patent"). The
Company responded to this suit and denied infringement of each patent,
asserting that the Donnelly patents are invalid and unenforceable and
asserting that Donnelly had failed to comply with the patent marking
statute, precluding recovery of pre-suit damages.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
(4) (Cont.)
Gentex made a motion for summary judgment of invalidity of the
Donnelly dark or color-matched seal patent in June 1994, and a
decision on that motion is pending. Also pending is a decision on
Donnelly's motion for a preliminary injunction against alleged
infringement of that same patent. In April 1995, the Company also
filed motions for summary judgment of the non-infringement and
invalidity of the Donnelly "light and rearview mirror assembly
patents" and motions for partial summary judgment precluding Donnelly
from recovering any damages for certain acts of alleged infringement.
A decision also is pending on those motions.
In April 1995, Donnelly filed five motions for partial summary
judgment seeking to dismiss certain defenses asserted by the Company
against the dark or color-matched seal patent and against two of the
light and rearview mirror assembly patents, and seeking summary
judgment of the alleged infringement of the dark or color-matched seal
patent and one of the light and rearview mirror assembly patents.
Decisions also are pending on those motions. Both the dark or
color-matched seal patent and the light and rearview mirror assembly
patents are scheduled for trial to a jury in October 1995.
In the October 1994 case of Donnelly Corporation vs. Gentex
Corporation (No. 1:94 CV 695), filed in U.S. District Court for the
Western District of Michigan, Southern Division, Donnelly alleged the
Company's rearview mirror products infringe two Donnelly patents
directed to the use of ultraviolet stabilizers to protect
electrochromic mirrors from the harmful effects of ultraviolet
radiation. Donnelly also made a motion for a preliminary injunction.
The Company responded to this suit, denying infringement and asserting
the Donnelly patents are invalid and unenforceable because Donnelly
engaged in inequitable conduct before the U.S. Patent and Trademark
Office in obtaining these patents. This case is in the discovery
stage and no trial date has been scheduled.
In June 1995, the Company filed suit against Donnelly Corporation (No.
95 CV 120) in the U.S. District Court for the Western District of
Michigan, Southern Division, for a judgment declaring three Donnelly
patents to be invalid and not infringed by the Company. Two of those
Donnelly patents are directed to rearview mirrors having an optical
display, such as a compass reading, and the other Donnelly patent is
directed to rearview mirrors made from a certain type of float glass.
Discovery is just beginning in this case and no trial date has been
scheduled.
While the ultimate results of patent litigation cannot be predicted
with certainty, management believes that they will not have a material
adverse effect on the Company's financial statements.
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GENTEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS:
SECOND QUARTER 1995 VERSUS SECOND QUARTER 1994
Net Sales. Net sales for the second quarter of 1995 increased by
approximately $5,312,000, or 26%, when compared with the second
quarter last year. Automatic mirror unit shipments increased from
approximately 422,000 in the second quarter of 1994 to 507,000 in the
current quarter. This increase primarily reflected increased
penetration on foreign 1995 model year vehicles for interior and
exterior electrochromic Night Vision Safetya (NVS) Mirrors. Net
sales of the Company's fire protection products increased 11%, as
increased sales to other customers offset reduced shipments of its
strobe warning light to a major customer that has developed its own
strobe product.
Cost of Goods Sold. As a percentage of net sales, cost of goods sold
increased from 56% in the second quarter of 1994 to 61% for the
comparable period in 1995. This increased percentage primarily
reflects automotive customer price reductions for the 1995 model year
and changes in the Company's product mix of automotive mirror
shipments.
Operating Expenses. Research and development expenses increased
approximately $329,000, but remained at 6% of net sales, when compared
with the same quarter last year, primarily reflecting additional
staffing and contractual research and engineering services. Selling,
general and administrative expenses increased approximately
$1,069,000, and increased from 11% to 13% of net sales, when compared
with the second quarter of 1994. This increased expense primarily
reflected higher patent litigation activities.
Other Income - Net. Other income increased by approximately $255,000
when compared with the second quarter of 1994, primarily due to the
higher investable fund balances and higher interest rates.
SIX MONTHS ENDED JUNE 30, 1995 VERSUS SIX MONTHS ENDED JUNE 30, 1994
Net Sales. Net sales for the six months ended June 30, 1995,
increased by approximately $10,196,000, or 24%, when compared to the
same period last year. Automatic mirror unit shipments increased from
approximately 839,000 in the first six months of 1994 to 1,025,000 in
the first six months of 1995. This increase primarily reflected
increased penetration on foreign 1995 model year vehicles for interior
and exterior electrochromic Night Vision Safetya (NVS) Mirrors. Net
sales of the Company's fire protection products increased 2% as
increased sales to other customers offset reduced shipments of its
strobe warning light to a major customer that has developed its own
strobe.
Cost of Goods Sold. As a percentage of net sales, cost of goods sold
increased from 56% in the first six months of 1994 to 60% for the
comparable period in 1995. This increased percentage primarily
reflects automotive customer price reductions for the 1995 model year
and changes to the Company's product mix of automotive mirror
shipments.
Operating Expenses. For the six months ended June 30, 1995,
research and development expenses increased approximately $500,000,
but remained at 6% of net sales, when compared to the same period last
year, primarily reflecting additional staffing and contractual
research and engineering services. Selling, general and
administrative expenses increased approximately $1,952,000, and
increased from 11% to 12% of net sales, when compared to the first six
months of 1994. This increased expense primarily reflected higher
patent litigation activities.
Other Income - Net. Other income for the six months ended June 30,
1995, increased by approximately $650,000 as compared to the first six
months of 1994, primarily due to the higher investable fund balances
and higher interest rates.
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ITEM 2. RESULTS OF OPERATIONS (CONT.) :
FINANCIAL CONDITION:
Management considers the Company's working capital and long-term
investments totaling approximately $63,518,000 at June 30, 1995,
together with internally generated cash flow and an unsecured
$5,000,000 line of credit from a bank, to be sufficient to cover
anticipated cash needs for the foreseeable future.
TRENDS AND DEVELOPMENTS:
The Company currently supplies NVS Mirrors to Chrysler Corporation,
Ford Motor Company and General Motors Corporation under long-term
contracts. During the quarter, the General Motors contract was
extended through the 1998 model year, and the Company entered into
contracts with BMW for the four-year period ending March 31, 1999.
The term of the Ford contract is through December 1999, and the
Chrysler contract runs through the 1999 Model Year.
The Company has agreed to price reductions over the term of its
long-term contracts and continues to experience pricing pressures from
its automotive customers, which have and will continue to affect its
margins to the extent that the Company is unable to fully offset the
price reductions with productivity improvements, material cost
reductions and increases in unit sales volume.
The total costs to defend the Company in the July 8, 1993, and
October 13, 1994, suits filed by Donnelly Corporation will be affected
by the duration and activity level, and are not determinable at this
time. However, management currently believes that, if the current
trend continues, patent litigation costs will continue to increase
with the additional suits and related activity levels, but should peak
out during the year.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In May 1995, the Company settled the patent infringement suit
that was filed by C-D Marketing, Ltd., on February 10, 1994.
The settlement involved the acquisition by the Company of all
of the United States and foreign patent rights of C-D
Marketing, Ltd., for a cash amount that is not material to the
Company's financial position or results of operations.
On June 23, 1995, the Company filed suit against Donnelly
Corporation (No. 95 CV 120) in the U.S. District Court for the
Western District of Michigan, Southern Division, for a judgment
declaring three Donnelly patents to be invalid and not
infringed by the Company. Two of those Donnelly patents are
directed to rearview mirrors having an optical display, such as
a compass reading, and the other Donnelly patent is directed to
rearview mirrors made from a certain type of float glass.
Discovery is just beginning in this case and no trial date has
been scheduled.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the shareholders of the Company was held
on May 11, 1995, at which:
(i) The following nominees were elected to serve three-year
terms on the Company's Board of Directors by the
following votes:
Mickey E. Fouts John Mulder
For 14,418,698 14,429,298
Against - -
Withheld 273,750 263,150
Broker Non-Votes - -
The terms of office for incumbent Directors Fred Bauer,
Harlan Byker, Kenneth La Grand, Ted Thompson and Leo Weber,
continued after the meeting.
(ii) A proposal to approve the Amended and Restated Gentex
Corporation Qualified Stock Option Plan was approved by
the following vote:
For 8,003,290
Against 2,563,907
Abstain 111,100
Broker Non-Votes 4,014,151
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on Page 11.
(b) No reports on Form 8-K were filed during the three
months ended June 30, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENTEX CORPORATION
Date 8/1/95 /s/ FRED T. BAUER
------------- ------------------------------
Fred T. Bauer
Chairman and Chief
Executive Officer
Date 8/1/95 /s/ ENOCH C. JEN
------------- ------------------------------
Enoch C. Jen
Vice President-Finance,
Principal Financial and
Accounting Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
3(a)(1) Registrant's Articles of Incorporation were filed in 1981 as
Exhibit 2(a) to a Registration Statement on Form S-18
(Registration No. 2-74226C), an Amendment to those Articles
was filed as Exhibit 3 to Registrant's Report on Form 10-Q in
August of 1985, an additional Amendment to those Articles was
filed as Exhibit 3(a)(i) to Registrant's Report on Form 10-Q
in August of 1987, and an additional Amendment to those
Articles was filed as Exhibit 3(a)(2) to Registrant's Report
on Form 10-K dated March 10, 1992, all of which are hereby
incorporated herein by reference.
3(a)(2) Amendment to Articles of Incorporation, adopted on May 12, 1994.
3(b) Registrant's Bylaws as amended and restated March 1, 1990,
were filed as Exhibit 3(b) to Registrant's Report on Form 10-K
dated March 1, 1990, and the same is incorporated herein by
reference.
4(a) A specimen form of certificate for the Registrant's common
stock, par value $.06 per share, was filed as part of a
Registration Statement on Form S-18 (Registration No.
2-74226C) as Exhibit 3(a), as amended by Amendment No. 3 to
such Registration Statement, and the same is hereby
incorporated herein by reference.
4(b) Shareholder Protection Rights Agreement, dated as of August
26, 1991, including as Exhibit A the form of Certificate of
Adoption of Resolution Establishing Series of Shares of Junior
Participating Preferred Stock of the Company, and as Exhibit B
the form of Rights Certificate and of Election to Exercise,
was filed as Exhibit 4(b) to Registrant's report on Form 8-K
on August 20, 1991, and the same is hereby incorporated herein
by reference.
4(b)(1) First Amendment to Shareholder Protection Rights Agreement,
effective April 1, 1994, was filed as Exhibit 4(b)(1) to
Registrant's report on Form 10-Q on April 29, 1994, and the
same is hereby incorporated herein by reference.
10(a)(1) A Lease dated August 15, 1981, was filed as part of a
Registration Statement (Registration Number 2-74226C) as
Exhibit 9(a)(1), and the same is hereby incorporated herein by
reference.
10(a)(2) A First Amendment to Lease dated June 28, 1985, was filed as
Exhibit 10(m) to Registrant's Report on Form 10-K dated March
18, 1986, and the same is hereby incorporated herein by
reference.
*10(b)(1) Gentex Corporation Qualified Stock Option Plan as amended and
restated, effective May 11, 1995. 13
*10(b)(2) Gentex Corporation 1987 Incentive Stock Option Plan (as
amended through May 24, 1989), was filed as Exhibit 10(g)(3)
to Registrant's Report on Form 10-K dated March 1, 1990, and
the same is hereby incorporated herein by reference.
*10(b)(3) Gentex Corporation Restricted Stock Plan was filed as Exhibit
10(b)(3) to Registrant's Report on Form 10-K dated March 10,
1992, and the same is hereby incorporated herein by reference.
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EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
*10(b)(4) Gentex Corporation Non-Employee Director Stock Option Plan as
amended through March 5, 1993, was filed as Exhibit 10(b)(4) to
Registrant's Report on Form 10-K dated March 5, 1993, and the
same is incorporated herein in reference.
10(e) The form of Indemnity Agreement between Registrant and each of
the Registrant's directors was filed as a part of a
Registration Statement on Form S-2 (Registration No. 33-30353)
as Exhibit 10(k) and the same is hereby incorporated herein by
reference.
27 Financial Data Schedule
* Indicates a compensatory plan or arrangement.
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GENTEX CORPORATION
QUALIFIED STOCK OPTION PLAN
(AS AMENDED AND RESTATED, EFFECTIVE MAY 11, 1995)
1. Purpose. The purpose of this Plan is to provide an opportunity for
certain employees of Gentex Corporation and its subsidiaries to purchase shares
of capital stock of the Corporation and thereby have an additional incentive to
contribute to the prosperity of the Corporation.
2. Definitions. The following terms are defined for use herein as follows:
a. "Board" means the Board of Directors of Gentex Corporation.
b. "Common Stock" means the common stock (par value ($.06 per share)
of Gentex Corporation.
c. "Committee" means the committee appointed pursuant to Paragraph 4
to administer the Plan.
d. "Corporation" means Gentex Corporation and any subsidiary
corporation where Gentex Corporation owns fifty percent (50%) or more of
the combined voting power of all outstanding securities within the meaning
of the applicable provisions of the Internal Revenue Code.
e. "Effective Date" means the effective date of this Amended and
Restated Plan, May 11, 1995.
f. "Market Value" means the closing sale price of Common Stock
reported in The Nasdaq Stock Market for the day on which the particular
option is granted, or, if prices of shares of Common Stock are not so
published for that date, then a fair market value determined by the
Committee by any reasonable method selected by it in good faith.
g. "Optionee" means any employee to whom an option has been granted
under the Plan.
h. "Option Agreement" means an agreement evidencing options as
provided in Paragraph 7 of the Plan.
i. "Plan" means this Qualified Stock Option Plan of the Corporation as
in effect from time to time.
j. "Option Price" means the purchase price for Common Stock under an
option, as determined under Paragraph 7 of this Plan.
3. Shares.
a. The total number of shares of the Common Stock which may be sold
under the Plan shall not exceed 2,250,000 shares, except that the total
number of shares which may be sold under the Plan may be increased to the
extent of adjustments authorized by Paragraph 10. Such shares shall be
authorized shares and may be either unissued shares or treasury shares.
b. If an option granted under the Plan shall expire or terminate for
any reason without having been exercised in full, the shares not delivered
under such option shall be available for options subsequently granted.
4. Administration.
a. The Plan shall be administered by a Committee appointed by the
Board, which shall consist of three (3) or more members. All members of the
Committee shall be directors who are "disinterested persons" within the
meaning of Rule 16b-3 promulgated by the Securities and Exchange
Commission. Except as provided in Paragraph 7 f., the Committee shall
determine the employees to be granted options, the amount of stock to be
optioned to each employee, and the terms of the options to be granted. The
Committee shall have full power and authority to interpret the provisions
of the Plan, to supervise the administration of the Plan and to adopt forms
and procedures for the administration of the Plan. All determinations made
by the Committee shall be final and conclusive.
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b. The granting of any option pursuant to this Plan shall be entirely
within the discretion of the Committee. Nothing herein contained shall be
construed to give any officer or employee any right to participate under
this Plan.
c. Each person who is or shall have been a member of the Committee
shall be indemnified and held harmless by the Corporation from and against
any cost, liability or expense imposed or incurred in connection with such
person's or the Committee's taking or failing to take any action under the
Plan. Each such person may rely on information furnished in connection with
the Plan's administration by any appropriate person or persons.
5. Eligibility. Only employees of the Corporation shall be eligible to
participate in the Plan. The Committee shall determine whether or not an
individual is eligible to participate in the Plan. An employee who has been
granted an option under this Plan or any other stock option plan of the
Corporation may be granted additional options.
6. Exercise Price. The per share exercise price of each option granted
under the Plan shall be at least one hundred percent (100%) of the Market Value
of a share of Common Stock; provided, however, any option granted to a
participant possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of Gentex Corporation shall be at an Option Price
not less than one hundred ten percent (110%) of the market value of a share of
Common Stock and shall not be exercisable after the expiration of five years
from the date the option is granted.
7. Terms of Options. Each option shall be evidenced by a written agreement
containing such terms and conditions as are set by the Board or the Committee,
including without limitation the following:
a. Number of Shares. Each Option Agreement shall state the number of
shares to which it pertains.
b. Exercise Price. Each Option Agreement shall state the exercise
price.
c. Medium and Time of Payment. The exercise price for each share
purchased pursuant to an option granted under the Plan shall be payable in
full upon exercise, and may be paid in cash or, in full or in part, by the
surrender of Common Stock owned by the Optionee valued at fair market value
or by the surrender of Option rights hereunder that are then exercisable,
valued at the difference between the Option Price and the fair market value
of the underlying Common Stock. Promptly after the exercise of an Option
and the payment of the full Option Price, the Optionee shall be entitled to
the issuance of a stock certificate evidencing ownership of such Common
Stock. However, an Optionee shall have none of the rights of a shareholder
until a certificate for those Shares is issued to the Optionee, and no
adjustment will be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued, except as
provided in Paragraph 10 of this Plan.
d. Term and Exercise of Options. Each option shall be exercisable in
whole or in part in such amounts and at or after such dates as may be
specified in the option agreement. In no event, however, shall any option
be exercisable less than one (1) year from the date of grant.
e. Administrative Discretion. The Committee may in its discretion
vary, among employees and among options granted to the same employee, any
and all of the terms and conditions of options granted under the Plan,
including the term during which and the amounts in which and dates at or
after which such options may be exercised.
f. Special C.E.O. Terms. Notwithstanding any other provision of this
Plan to the contrary, the current chief executive officer of Gentex
Corporation shall receive, as of the date this Plan is approved by the
Board, and annually thereafter as of the time his compensation is reviewed
by the Committee, an option for 15,000 shares of Common Stock, and no other
options may be granted to that individual under this Plan. These options
shall become exercisable for twenty percent (20%) of the shares on the
first anniversary of the grant date and for an additional twenty percent
(20%) on each anniversary thereafter, and all unexercised options shall
expire on the seventh anniversary date of the grant.
14
15
8. Transferability of Options and Common Stock. Options under this Plan
may not be transferred except by will or according to the laws of descent and
distribution. During the lifetime of the Optionee, an option may be exercised
only by the Optionee or his guardian or legal representative. After an
Optionee's death, options that were exercisable at the date of death may be
exercised at any time within one year after the date of death, subject to prior
expiration, by the executor or administrator of the Optionee's estate, any
person(s) who acquired the option directly from the Optionee by bequest or
inheritance, or any person designated specifically in a written designation
signed by the Optionee and filed with the Committee prior to the date of death.
The Corporation may, in the event it deems the same desirable to assure
compliance with applicable federal and state securities laws, legend any
certificate representing shares issued pursuant to the exercise of an option
with an appropriate restrictive legend, and may also issue appropriate stop
transfer instructions to its transfer agent with respect to such shares.
9. Termination of Options. Each option agreement shall contain such
provisions as the Committee may deem advisable for termination of the option in
the event of, and/or exercise of the option after the Optionee's death,
disability, or termination of employment by the Corporation. No option may be
exercised more than three (3) months after the termination of the Optionee's
employment by the Corporation, nor more than twelve (12) months after the
Optionee shall have died or become disabled, without the specific approval of
the Committee.
Option agreements may also contain, in the discretion of the Committee,
provisions for termination of options and/or acceleration of exercise rights in
the event of any merger or consolidation of the Corporation with, or acquisition
of the Corporation or substantially all of its assets by, any other corporation
or entity.
Nothing in the Plan or in any option shall limit or affect in any way the
right of the Corporation to terminate an Optionee's employment at any time nor
be deemed to confer upon any Optionee any right to continue in the employ of the
Corporation.
10. Adjustment Provision. If the number of shares of Common Stock
outstanding changes by reason of a stock dividend, stock split,
recapitalization, merger, consolidation, split-up, combination or exchange of
shares, the aggregate number and class of shares available under this Plan and
the number of shares subject to each outstanding option, together with the
option prices, shall be appropriately adjusted by the Board or Committee to
prevent dilution of the interests of Optionees and of the Plan.
11. Effective Date of Plan, Termination and Amendment. The May 18, 1995
Plan Restatement shall take effect only upon and as of the date of approval of
the Plan by the Corporation's stockholders. Unless earlier terminated by the
Board, the Plan shall terminate on the date ten (10) years subsequent to the
date of the adoption of the Plan Restatement by the Board, after which date no
options may be granted under this Plan. The Board may terminate the Plan at any
time, or may from time to time amend the Plan as it deems proper and in the best
interest of the Corporation, provided that no such amendment may (a) alter the
aggregate number of shares that may be issued under the Plan, (b) decrease the
price at which options may be granted, or (c) modify the eligibility
requirements set forth in Paragraph 5.
CERTIFICATION
The foregoing Plan Restatement was duly adopted by the Board of Directors
on the 12th day of August, 1994, subject to the approval of the Company's
shareholders.
/s/ CONNIE HAMBLIN
--------------------------------------
Connie Hamblin, Secretary
Gentex Corporation
15
16
[ARTICLE] 5
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] JUN-30-1995
[CASH] 16,298,689
[SECURITIES] 15,683,471
[RECEIVABLES] 12,616,141
[ALLOWANCES] (432,803)
[INVENTORY] 5,325,198
[CURRENT-ASSETS] 50,225,821
[PP&E] 28,737,598
[DEPRECIATION] (10,833,807)
[TOTAL-ASSETS] 94,298,556
[CURRENT-LIABILITIES] 10,753,135
[BONDS] 0
[COMMON] 1,003,990
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 81,612,870
[TOTAL-LIABILITY-AND-EQUITY] 94,298,556
[SALES] 26,020,719
[TOTAL-REVENUES] 26,020,719
[CGS] 15,947,030
[TOTAL-COSTS] 20,822,268
[OTHER-EXPENSES] (676,985)
[LOSS-PROVISION] 18,500
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 5,975,436
[INCOME-TAX] 1,879,000
[INCOME-CONTINUING] 3,996,436
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 3,996,436
[EPS-PRIMARY] 0.23
[EPS-DILUTED] 0.23
